New state utility metering changes solar landscape

Jenny Steffensmeier, owner and operator of Steffensmeier Welding & Mfg., speaks with Amy Van Beek of Ideal Energy about the solar industry as part of a visit by state officials last week. Photo by Chuck Vandenberg/PCC.

BY CHUCK VANDENBERG
PCC EDITOR

FORT MADISON – A new metering system that’s been put in place as part of an Iowa Utilities Board pilot program may have an impact on the future of solar projects.

The new program went into place at the beginning of May and restructures how Alliant Energy reimburses business and residences who produce energy from renewable sources such as solar or metering.

Anyone with energy producing solar cells or tiles was being reimbursed dollar for dollar by Alliant. Alliant would buy the energy at the same rate they were selling it to encourage the solar energy production. However many facilities have designed solar projects that create more energy than the business, industry, or residence uses, and that’s where the metering is changing.

Justin Foss, a spokesman for Alliant Energy, said the company will continue to reimburse up to 100% of demand at the current rates, but any production over the peak demand for any particular home or facility will be reimbursed at a rate more comparable to what the utility could buy the renewable energy for on the open market.

“We believe it makes sense to support customers who want to generate their own energy,” Foss said. “We also believe the other 99% want us to pay the lowest possible price for energy and we can buy renewable on the market for a fraction of the cost of buying from a customer who installed the solar panels. We want to strike that balance of supporting those who want to generate energy, but not add extra costs on for all of our other customers.”

Foss said Alliant doesn’t see the new program having a chilling effect on the renewable energy front.

The process started four years ago when the Iowa Utilities Board wanted a study to look at what the future of customer-owned electrical generation was going to look like. The study was aimed at how net-metering could be done in a way that balances the needs of customers, utilities, and renewable energy demands.

According to Foss, net metering is the process by which utilities purchase solar energy or renewable energy back from the customer when they generate it.

“When solar energy was just starting out, it was a simple and easy way to help support those who wanted to generate their own energy. For every unit of energy you produce, we would compensate you for a full unit of energy,” Foss said. “What’s lost in the unit of energy that we sell it for, let’s say 15 cents/kilowatt…the actual energy in that is around 3 cents, everything else, the other 12 cents, is cost of poles, wires, generation stations, crews that come out and fix it, their truck…all the other costs of doing business.”

“As the cost of solar energy has come down, it has made sense to reduce the amount of that subsidy as well . The IUB wanted to do a study and see how all that would work.”

Channing Congdon, director of design for Ideal Energy of Fairfield, said solar is still a pretty darned good deal even under the new metering tariffs, but the new program makes the program not quite as good as it was.

“It’s disengenous to say it’s not going to have a chilling effect,” he said.

“This is our frustration. We were at a point where the IUB was looking at ways to encourage renewable energy. They want us to see the value of that. A change that looks to make it a better deal to go to solar and this was the result,” Congdon said. Now you have a cap and you’ll install less solar. It’s being talked about one way and comes out on the other.”

He said the new program has a five-year horizon which he said was a long time on a growing industry.

“The main takeaway is the returns are reduced and the array of sizes we would do have been reduced,” said Amy Van Beek, who with husband Troy, founded Ideal Energy.

“For those looking to go for 100% offset, this program does make it difficult to do that. It’s a much more complex system. Going off demand for homeowners, those are a lot more complex calculations in that formula and the demand may be in a pool with a load class from the utility.”

But Foss said Alliant went through and looked at their records as part of the IUB’s request for new metering tariffs, and said most commercial projects are built to offset demand and not to create additional energy.

The plan will pay energy created over demand at about 2.5 cents per kilowatt hour compared to the full rate of about 15 cents. Foss said the additional 12 cents of the cost they normally charge is for trucks, poles, repairmen and other peripheral costs.

The pilot program is for 3-5 years and for the customers who’ve already made that investment we’re gonna honor that program. We recognize those who made that investment under those terms, of course we are.

He said the new program also offers a cash out option. Some customers who’ve sized their projects large enough to create more energy than they can use can opt to cash out of the program on a yearly basis.

“No matter how much they use, they never cash out of that bank. If you never can use enough energy to cash out the bank, that is of no value. Under the new tariffs we’ll cash that out once a year,” Foss said.

But Congdon said it’s more beneficial to customers to keep energy banked because energy needs can fluctuate from year to year depending on environmental and structural factors.

Van Beek said the new tariffs are, in fact, much better than the original proposals issues in February.

“When Alliant first released the first comments of the IUB in February, we would have had a very significant impact, but now they’ve released the second set, it looks like something we could work with,” she said.

Most residential projects don’t go 100%. Typically they don’t have enough roof space. It’s definitely a case-by-case net metering. Bottom line is, it’s become much more complicated to understand. We’re finding a way to make it work.”

Van Beek’s husband is a former Navy SEAL and she said he believes that everyone should have the choice to do solar if they want.

“Alliant, obviously is not stopping them, just making it less viable,” she said.

Mike Mohrfeld of Mohrfeld Electric in Fort Madison said he doesn’t see the new changes having that big of an impact.

“Under the new proposal, what we’re seeing for a typical customer is it not having any negative impact,” said Mohrfeld. “Non-traditional buildings spike at different months., those are the customers it will have a greater impact on. Your traditional gas heat uses more electricity in the summer and your electric heat spikes in the winter and that’s when solar isn’t performing as well. These new tariffs follow a standard customer pretty well.”

Mohrfeld said at the end of the day, Alliant still probably has the best net metering system.

“We get stuck in the conversation way more than we should,” Mohrfeld said. “At the end of the day, we’re trying to wipe out the energy bill and that can still happen. We’re dwelling on a fractional thing. We think it’s still a good net metering system, better than a lot of rurals.”

Todd Schneider, owner of School House Apartments, talks with Lee County Economic Development Group CEO Joe Steil and Marketing manager Dana Millard, about the impact of solar energy on his property. Courtesy photo.

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Pen City Current and pencitycurrent.com are products of Market Street Publishing, LLC, a multi-platform media company delivering hyper-local news, sports and advertising information to Fort Madison, IA and surrounding communities.